Marvin R. Duncan

Inflation Effects on Financial Performance and Structure of the Farm Sector

the general price level. As Samuelson and others point out, the problem with inflation is not so much price increases, but rather the inefficiencies and inequities that result from inflation-induced changes in relative prices. Relative price changes affect supply-demand relationships for both factor and product markets. Changes in these relationships in turn influence the level and distribution of income, asset values, cash flows, debt, net worth, and structural characteristics of farm firms. The objective of this paper is to provide a broad overview of inflations impact on the financial performance and structure of the farm sector.

Current Macroeconomic Policies and U.S. Agriculture: Discussion

the stage for further discussion and research. Starleafs paper asserts the U.S. economy has been demand-managed during the postwar period in an effort to achieve high growth and resource utilization rates-given implied price stability constraints. Other industrialized countries have pursued similar goals, as well. While demand management has not been abandoned, it certainly has been reevaluated by most industrialized countries. As a result, these countries have exhibited much greater willingness to accept slow or negative real economic growth rates in order to address stubborn inflation problems. In his paper, Starleaf utilizes a number of regression equations to demonstrate the linkages between the farm sector and the general economy. While many of his conclusions have been reported previously in agricultural economics literature, some new and useful perspectives are discussed. For example, agricultural economists have long been concerned with supply management. But if strong economic growth in the general economy has as positive an impact on farm prices as he indicates, perhaps farmers should become more interested in demand management. Farm policy makers could become more supportive of public transfer payment programs such as food stamps, school lunches, and the like. Parenthetically, supply considerations are more important in determining farm price movements than Starleaf indicates. The statis-

Discussion on Boehlje, Harris, Hoskins, Penson, Jr., Hughes, Robison and Brake

The authors of these papers have recognized correctly that the U.S. agriculture sector now interacts with an international economy and that innovations with respect to capital flows and intermediation affect U.S. agriculture more frequently than before, but in ways that are still poorly understood. The models show promise for explaining economic phenomena and the implications thereof in ways that are useful to public and private decision processes. This is important. Too often economists move on to new research before developing the interface with those who make economic decisions. The models presented also share a prodigious demand for data, some of which are unavailable, except by survey. Despite efforts nationally to improve data sources and quality, a countervailing effort to reduce the reporting burden of financial institutions likely will mitigate efforts to have some of the needed data collected by government bodies. This is not a criticism of the authors. It is entirely correct to build conceptual models, selecting variables for inclusion on the basis of theoretical rigor. But, making such models operational frequently requires compromises. Finally, these are conceptual models. In the first two papers, it would have been useful to see more meat on the conceptual bones. Questions as to how the relationships indicated are to be specified and estimated and the performance of the models outside the data periods used for estimation must remain unanswered for now. Consequently, argicultural economists will benefit from progress reports on these models.